Forex currency trading (or Foreign Exchange trading) is one of the most lucrative forms of stock trading today. The Forex market was once limited to lending institutions and government banks, but is now open to all investors. If you are currently a stock investor or are interested in stocks, then you don't want to miss the amazing opportunity the Forex market offers. More than $2 trillion dollars in currencies are being traded daily with Forex currency trading! This brief beginner's guide will explain what Forex currency trading is and how it can benefit you. Also, the guide will show you how to avoid the pitfalls of Forex currency trading.
In currency trading, there are currency pairs. A currency pair consists of two currencies, one of which is being bought and the other is the currency used to buy the other currency. Take a look at this example: GBP/USD where GBP is the British Pound. The GBP is what we call the 'base currency' which has the initial value of 1. This is the currency being bought. Next is the USD or the US dollar. This is what we call the 'quote-currency' and has the value of how much one of the base currency is worth. For example: EUR/USD 1.2436, one Euro is worth 1.2436 US dollars. If you need 1000 Euro, you'd have to exchange it for 1243.6 US dollars. Other major currencies traded are Canadian dollar (CAD), Japanese Yen (JPY), Australian dollar (AUD, and the Swiss Franc (CHF).
In currency trading, a currency pair has a corresponding 'bid' and 'ask' price. The 'bid' price is how much the base currency is being sold by the currency broker while the 'ask' price is how much the currency is being bought by the trader. The bid price is usually lower than the ask price and this is where sales are made by the brokers. The difference between the 'bid' and 'ask' price is called the 'spread'.
Many Forex currency trading firms will allow you a leverage of 100:1 for your trading. Some will offer even more. If you have a 100:1 leverage, you can invest $1,000 of your own money, but trade $100,000! You can actually double your money with an increase of only one pip. However, you can also lose your entire investment with a decrease. This could equal big profits or losses, so be sure to consider the risks before jumping in with both feet.
As mentioned, currency trading occurs 24 hours on a daily basis. Traders can decide when to trade their currencies. As changes could happen any time, the trader should always keep watch on the best time to trade. Currency trade does not need a big capital to start. Beginners can start with small amounts and eventually increase their trading resources. There is also no need to play on all currencies on the market. A novice can focus on two currencies at first while getting the hang of it and then expand later on for bigger profits.
Industry experts have debated for years the optimum amount one should fund their futures trading account with. The obvious moving target is enough capital to withstand the drawdown periods. Many factors go into this but Ive seen numbers range anywhere from $10,000 to $50,000 and up. If this is the case then there is little doubt why most futures traders lose as most are willing to fund only the amount required to cover Margin or the Brokers account minimum usually a few thousand dollars. One of the biggest reasons for small business failure is being under capitalized, the same holds true in futures trading.
In currency trading, there are currency pairs. A currency pair consists of two currencies, one of which is being bought and the other is the currency used to buy the other currency. Take a look at this example: GBP/USD where GBP is the British Pound. The GBP is what we call the 'base currency' which has the initial value of 1. This is the currency being bought. Next is the USD or the US dollar. This is what we call the 'quote-currency' and has the value of how much one of the base currency is worth. For example: EUR/USD 1.2436, one Euro is worth 1.2436 US dollars. If you need 1000 Euro, you'd have to exchange it for 1243.6 US dollars. Other major currencies traded are Canadian dollar (CAD), Japanese Yen (JPY), Australian dollar (AUD, and the Swiss Franc (CHF).
In currency trading, a currency pair has a corresponding 'bid' and 'ask' price. The 'bid' price is how much the base currency is being sold by the currency broker while the 'ask' price is how much the currency is being bought by the trader. The bid price is usually lower than the ask price and this is where sales are made by the brokers. The difference between the 'bid' and 'ask' price is called the 'spread'.
Many Forex currency trading firms will allow you a leverage of 100:1 for your trading. Some will offer even more. If you have a 100:1 leverage, you can invest $1,000 of your own money, but trade $100,000! You can actually double your money with an increase of only one pip. However, you can also lose your entire investment with a decrease. This could equal big profits or losses, so be sure to consider the risks before jumping in with both feet.
As mentioned, currency trading occurs 24 hours on a daily basis. Traders can decide when to trade their currencies. As changes could happen any time, the trader should always keep watch on the best time to trade. Currency trade does not need a big capital to start. Beginners can start with small amounts and eventually increase their trading resources. There is also no need to play on all currencies on the market. A novice can focus on two currencies at first while getting the hang of it and then expand later on for bigger profits.
Industry experts have debated for years the optimum amount one should fund their futures trading account with. The obvious moving target is enough capital to withstand the drawdown periods. Many factors go into this but Ive seen numbers range anywhere from $10,000 to $50,000 and up. If this is the case then there is little doubt why most futures traders lose as most are willing to fund only the amount required to cover Margin or the Brokers account minimum usually a few thousand dollars. One of the biggest reasons for small business failure is being under capitalized, the same holds true in futures trading.
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Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: The Way To Speed Up A Tax Refund You have full permission to reprint this article provided this box is kept unchanged.
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